What Is Credit Monitoring?

ByG. Dautovic
September 23, 2021

Your credit score affects various, sometimes unexpected, aspects of your life. It can determine whether or not you become a house owner, if you’ll be able to ensure your car, or get some extra cash in your pocket in the form of a new credit card. But not everyone has the time to keep a close eye on their credit reports, and sometimes, it can be challenging to figure out which activity is suspicious. Luckily, there are services designed to do exactly that – watch over your credit score for you.

So, what is credit monitoring all about? A service that monitors your credit score is a kind of a watchdog. It informs you as soon as any unusual behavior is detected in your credit reports. However, it’s up to you to decide what needs to be done in such situations and execute an appropriate strategy. We’ll go into more detail regarding the steps you can take later on in our guide.

Typically, people choose to sign up for these services because they fear their identity might get stolen, but there are also those who just want to stay on top of the changes that may affect their creditworthiness.

The Reasons to Monitor Your Credit

What does credit monitoring do for you? Not all monitoring companies offer the same services, but the majority of them have two things in common. Firstly, they will notify you within 24 hours if any alterations appear in your credit file, and secondly, the notifications are usually sent via phone call, text message, or email.

The activities your chosen agency might report include:

  • Hard inquiries: To assess if you’re eligible for a credit card or loan, a financial institution will often perform a thorough credit check. Having too many hard inquiries on your credit reports can significantly reduce your credit score.
  • New accounts: Credit monitoring agencies inform you when a new account is opened in your name so that you can respond accordingly if you weren’t the one who had opened it.
  • Address and name changes: A criminal can use your name and address to redirect your mail and to order checks and credit cards for themselves by impersonating you.
  • Public records: Public records refer to information filed by public agencies, for example, bankruptcies, tax liens, and civil court judgments. Again, once you receive the credit monitoring alert, check to see if those records belong to you.
  • Balances and payments: Your credit reports contain details about your payment history and balances on your credit products. Don’t hesitate to contact the three major credit bureaus (TransUnion, Equifax, and Experian) in case you notice an error.
  • Personal information on the dark web: The dark web is a haven for lawbreakers as it offers complete anonymity, making it perfect for buying and selling stolen financial data.
  • Credit-non-related red flags: Certain agencies even monitor sex offender registries, bank account activity, and payday loan applications.

The Limitations of Credit Monitoring

Although these monitoring services detect a lot, they have their limits. They provide monitoring, not prevention. They merely notify you when there’s a problem you should address.

There are, however, a few tips to assist you in protecting yourself against fraud and identity theft:

  • Guard your online information – don’t visit questionable websites and don’t use the same password for multiple accounts.
  • Don’t believe every phone call and email you receive – always verify the legitimacy of the requests for sensitive data.
  • Know who you’re interacting with online – no amount of credit tracking can help you if you voluntarily give away your information via social media or dating websites to people pretending to be in distress.
  • Be wary of malicious software – only install apps from trusted sources since fraudsters can disguise programs to look innocent and even quite appealing.
  • Hire an identity theft protection company – if you feel like you could use an extra hand keeping yourself safe, there’s plenty of quality identity theft services you could employ.

Calculating the Credit-Monitoring Cost

Prices for services that can observe your credit activity typically range from about $8 to $30, but there are also some companies that offer free subscriptions. As you can probably guess, paid monitoring is generally more extensive. With free plans, you will usually get copies of your credit reports and basic monitoring features. The best agencies provide instant ID verification alerts, credit reports from all three credit bureaus, and some form of identity theft assistance.

Nevertheless, paying more for something doesn’t necessarily mean that you’ll get guaranteed quality. That’s why you should settle on a service only after you’ve carefully examined all your options.

Pros and Cons of a Credit Monitoring Company

It makes sense to get a monitoring subscription if you don’t want to or simply don’t have the time to comb through credit reports yourself. Whether or not you should pay for this service depends on the probability of you becoming a fraud victim. For instance, if you’ve just lost your Social Security card or you’ve experienced any type of data breach whatsoever, we’d suggest the extra layer of protection. However, those who simply want to maintain a good credit score needn’t look for more than what free credit monitoring can give them.

What To Do if Your Identity Gets Stolen

The steps you must take in these situations include calling the fraud department, asking them to close or freeze your accounts, and then change your logins, passwords, and PINs. After that, you should place a fraud alert with either TransUnion, Equifax, or Experian (the bureau you contact is obligated to inform the other two). Also, report the theft to the Federal Trade Commission and, if you wish, to the police. Lastly, throughout the entire ordeal, try to keep in mind that things are rarely as bad as they seem at first glance.

Fixing the Damage

Before we end our “What Is Credit Monitoring?” guide, we’d also like to touch upon the subject of repairing the damage caused by identity thieves. The most important steps are:

  • Removing the fraudulent marks from your credit reports
  • Stopping collectors from collecting debts that aren’t yours
  • Replacing your ID
  • Repairing your credit score

Credit repair requires a lot of work, so you might want to consider getting a credit restoration specialist to help you.

Frequently Asked Questions
What do you mean by credit monitoring? +

The easiest way to describe it would be to say that a company that offers credit monitoring services pays close attention to your credit reports and informs you right away if any change occurs on them. The greatest benefit of opting for monitoring services is that no suspicious activity on your accounts will go unnoticed.

Why is credit monitoring important? +

In the last few years, identity theft has been on the rise, so many people have been forced to pay closer attention to their credit files. Seeing as it can be quite time consuming, not to mention tiresome, to keep track of your credit on your own, hiring a company that can do that instead of you is often the best choice. You can read our “What Is Credit Monitoring?” guide for more information on the subject.

Is credit monitoring worth it? +

Paying for services that monitor credit is a good idea if you suspect you might be at a higher level of fraud or identity theft risk. You don’t need more than what free services offer you if you just want to ensure that your credit reports are accurate.

How can I get my 3 credit scores for free? +

Several services allow you to check your credit scores for free. Credit Karma can provide you with free TransUnion and Equifax credit scores and credit reports. Credit.com is another excellent option for credit score monitoring, obtaining your Experian and VantageScore 3.0, and learning how each mark on your credit report affects these scores thanks to its free credit report card. Credit Sesame lets you access your VantageScore and also gives you valuable tips and suggestions. Lastly, you can check with your card issuers if it offers free credit score viewing to its cardholders.

Is credit monitoring free? +

We go into more detail about this topic in our “What Is Credit Monitoring?” guide but the gist of it is that some companies do offer free monitoring packages but, as with most costless products, these plans will provide you with only the most essential services, such as obtaining your credit reports (sometimes from just one of the three major credit bureaus) and alerting you of any changes that might appear in them.

About author

I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.

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